Abercrombie & Fitch 2008 Annual Report Download - page 36

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Table of Contents
store sales performance, while stores located in the South, Midwest and West regions had the weakest
comparable store sales performance on a consolidated basis.
From a merchandise classification standpoint across all brands, stronger performing masculine
categories included graphic tees, fragrance and fleece, while pants, jeans and knits posted negative
comparable sales. In the feminine businesses, across all brands, stronger performing categories included
graphics tees, jeans and sweaters, while knits and fleece posted negative comparable sales.
Direct-to-consumer net merchandise sales, which are sold through the Company’s websites and
catalogue, in the fourth quarter of Fiscal 2007 were $108.6 million, an increase of 45.2% versus the
previous year’s fourth quarter net merchandise sales of $74.8 million. Shipping and handling revenue for
the corresponding periods was $15.6 million in Fiscal 2007 and $9.8 million in Fiscal 2006. The
direct-to-consumer business, including shipping and handling revenue, accounted for 10.1% of total net
sales in the fourth quarter of Fiscal 2007 compared to 7.4% in the fourth quarter of Fiscal 2006. The
increase was driven by store expansion, both domestically and internationally, improved in-stock
inventory availability, an improved targeted e-mail marketing strategy and improved website
functionality.
Gross Profit
Gross profit during the fourth quarter of Fiscal 2007 was $825.6 million compared to $755.6 million
for the comparable period in Fiscal 2006. The gross profit rate for the fourth quarter of Fiscal 2007 was
67.2%, up 80 basis points from the fourth quarter of Fiscal 2006 rate of 66.4%. The increase in gross
profit rate can be attributed to both a higher IMU rate and a lower shrink rate compared to the fourth
quarter of Fiscal 2006, partially offset by a higher markdown rate.
Stores and Distribution Expense
Stores and distribution expense for the fourth quarter of Fiscal 2007 was $388.4 million compared to
$349.8 million for the comparable period in Fiscal 2006. The stores and distribution expense rate for the
fourth quarter of Fiscal 2007 was 31.6%, up 90 basis points from 30.7% in the fourth quarter of Fiscal
2006. The increase in rate was primarily related to the impact of minimum wage and management salary
increases and higher store fixed cost rates.
Marketing, General and Administrative Expense
Marketing, general and administrative expense during the fourth quarter of Fiscal 2007 was
$103.2 million compared to $101.6 million during the same period in Fiscal 2006. For the fourth quarter
of Fiscal 2007, the marketing, general and administrative expense rate was 8.4% compared to 8.9% in the
fourth quarter of Fiscal 2006. The decrease in the marketing, general and administrative expense rate was
a result of lower travel, samples and outside service expense rates, partially offset by an increase in the
home office payroll expense rate.
Other Operating Income, Net
Fourth quarter net other operating income for Fiscal 2007 was $3.0 million compared to $4.6 million
for the fourth quarter of Fiscal 2006. The decrease was driven primarily by losses on foreign currency
transactions in the fourth quarter of Fiscal 2007 as compared to gains on foreign currency transactions in
the fourth quarter of Fiscal 2006.
33
Source: ABERCROMBIE & FITCH CO /DE/, 10-K, March 27, 2009 Powered by Morningstar® Document Research℠